Dhe third quarter was very successful internationally for dividend seekers. According to fund management company Janus Henderson, distributions rose internationally by 7 percent to $415.9 billion, a record for a third quarter. Taking into account the strength of the dollar and other factors, the increase was more than 10 percent. 90 percent of companies would not have reduced the amount of dividends. However, this is a decrease of 4 percentage points compared to the first half of the year
In Europe, 96 percent of the companies surveyed did not reduce their dividends. However, since dividends are mainly paid out in the second quarter on the continent, the third quarter is much weaker for seasonal reasons, says Marc Theis, who is responsible for sales in Germany and Austria at Janus Henderson. Normally, no German company in the company’s dividend index pays a dividend in the third quarter.
Special dividends from oil and gas
The biggest drivers of dividend growth were oil and gas producers, which increased their total dividends by three-quarters year over year to a record $46.4 billion, largely through special dividends. Without this contribution, the total for the third quarter would have been about the same. It offset a decline in the mining industry, where companies cut dividends in response to lower commodity prices. There have been further increases in transport, semiconductor and chemical companies as well as in banks.
Geographically, Taiwan, the US, Hong Kong and Canada were the top contributors to growth. For the latter three countries, energy and financial stocks were decisive, while Taiwan showed exceptional strength in numerous sectors. A disappointment was China, where the third quarter is seasonally very important. Adjusted dividend growth of 6.7 percent lagged behind that of other countries, a third of companies cut dividends, and the real estate industry was a particular loss factor.
Janus Henderson raised its full-year payout forecast by $30 billion to $1.56 trillion on the back of special dividends and strong performance in the oil industry and Asia. That would be 8.3 percent more than in the previous year. This corresponds to adjusted growth of almost 9 percent and is well above the long-term growth trend of 5 to 6 percent.
“Like other commodity prices, energy prices are cyclical and the price of oil is already below where it started the year. So it’s unlikely, says portfolio manager Jane Shoemake. From 2023 onward, slower global economic growth will likely impact earnings and opportunities to increase payouts. “Dividend coverage, which is the ratio of a company’s earnings to its dividends, is near historic highs.”
The Janus Henderson Dividend Index includes 1,200 companies that are considered global leaders.